We need to agree how to measure sustainable economic development, says Rosatom’s Chief Sustainability Officer

Sustainable development has become a growing trend in Russian industry in recent years. Back in 2014, most Russian directors did not consider the impact of climate change on their business. Today, 89% of Russian CEOs cite that sustainability and corporate social responsibility become a part of business strategies, according to PwC’s Russian Board Survey.

In 2019, the same year Russia ratified the Paris Agreement, Rosatom established a sustainability unit and soon released a Policy on Sustainable development. AEC Advisor Irina Zhilina talked with Rosatom’s Chief Sustainability Officer, Polina Lion, about how sustainable performance helps to respond to business risks and what opportunities it open.

“In the last five years, we have been witnessing sustainability becoming a part of the compliance procedure on the European market. Addressing sustainability in Rosatom’s projects that is becoming a regular request from the market, sometimes there are even additional scores is granted in commercial tender applications.  Generally, we experience increasing requests from international customers. The informal requests to disclose information on sustainability performance have transformed into a legally binding contract clause. For example, before the pandemic, our clients were performing unannounced audit visits and facility checks as part of the agreement,” says Ms. Lion.

Investors looking beyond financial results

Sustainable performance is commonly measured through environmental, social, and governance (ESG) reporting. In a volatile business environment, ESG reporting is a mechanism to deal with uncertainty and risks. It also helps to attract investors that look beyond financial results. Nuclear Energy: An ESG Investible Asset Class report states that ESG data collection is used for screening investment opportunities and assessing a company’s continuing performance. An environmentally irresponsible company poses a greater financial risk, and various types of misconduct may result in substantial financial losses. Therefore, ESG has been integrated into many investment decision-making processes and has become mainstream.

“Incorporated ESG standards and practices and reporting allowed us to gain access to ESG-linked financing instruments, including green finance sources. They are becoming widely spread internationally and also developing in Russia now. In the last couple of years, Rosatom received three ESG-linked loans. Apart from that, in 2021, Rosatom (JSC Atomenergoprom) issued the first green bond on the Moscow stock exchange. Generated funds will be used to finance our green projects,” says Ms. Lion.

Pillars of Sustainability

After the UN has adopted the Sustainable Development Goals (SDGs), it has become clear that the business community will take a crucial role in influencing the global economy towards sustainability.  Today, sustainable performance is not only an intangible value creation. It is also becoming an effective instrument to secure long-term strategic advantage.

“Rosatom’s sustainability is based on several pillars: environment and “do-no-significant-harm” principle, transparency and social responsibility. Being a state-owned organisation, we have strong social corporate responsibility. Internally we allocate time and resources for employees training programmes and talent management. Externally, we are focusing on being transparent, conducting public hearings and consultations for our stakeholders. For example, we want to understand local needs and how we can engage the local population, including indigenous people. We have established information centres in the cities where Rosatom’s facilities are present to disseminate information about our activities. However, we also need to learn about concerns of the locals,” says Rosatom’s Chief Sustainability Officer.

In 2020 Rosatom joined the UN Global Compact and issued its first Sustainability report in 2021.  This year Vigeo Eiris, a part of Moody’s ESG Solutions, an international provider of ESG research for investors, awarded  Rosatom with a score of 56/100 for its ESG performance, a 12 points jump since the last year. Rosatom’s sustainable performance was evaluated as ‘advanced’ across each ESG pillar. For the majority of the rating’s criteria, its scores improved versus Vigeo Eiris’s 2020 assessment.

“It is essential to keep moving forward towards something we call “ESG-transformation.” ESG-compliant regular business processes is still a new concept in Russia. It takes a lot of effort to take a proactive position as a company. My work is to ensure the ESG standards are implemented not case by case, but on everyday basis, and to developing indicators and KPIs with regards to sustainable performance to set 3–5-year ESG-goals as a next step. I find it very challenging to get our employees on board with internal sustainability audits. Many lack this kind of experience and understanding that ESG performance is business-related. That is why we started an internal educational programme for ESG,” says Rosatom’s Chief Sustainability Officer, Polina Lion.

Operating in the Arctic

Rosatom has an extensive presence in the Arctic as a nuclear energy provider and also the primary operator of the Northern Sea Route. Rosatom manages port infrastructure and develops two transport and logistics hubs, constructing additional icebreakers and ice-class container ships to facilitate international shipping traffic along the Russian Arctic coastline.  Apart from that, Rosatom is currently working on a pilot hydrogen project at Kola peninsula to supply hydrogen and ammonia both to the European market and domestically.

“The Arctic is home to many enterprises, and many business activities have been undergoing for decades, contributing to the economic development and well-being of the local population. Climate change and preservation of the fragile Arctic ecosystem are major challenges we are currently facing. However, stopping all the activities is not a solution. To address these challenges, we need to agree on universal rules between the Arctic states and businesses on how do we define and measure sustainable economic development in the Arctic. We need them to be clear to ensure everyone is putting their efforts on the same ESG-aspects to ensure sustainable operating in the Arctic,” says Rosatom’s Chief Sustainability Officer Polina Lion.

 AIP

As a member of the Arctic Economic Council, Rosatom is currently looking into endorsing the Arctic Investment Protocol (AIP). The document gives guidelines to potential and current investors operating in the Arctic. It developed within the framework of the World Economic Forum, in accordance with the UN Sustainable Development Goals.

Proto Credit: Rosatom.

State Atomic Energy Corporation Rosatom is one the global technological leaders. It is a multi-industry holding comprising assets in power engineering, machine engineering and construction, among others. Having competencies across the entire nuclear fuel cycle, the corporation boasts the largest foreign project portfolio in the world with 35 power units at different stages of implementation in 12 countries. Rosatom’s product portfolio comprises more than 80 existing and future-oriented high-technology products and service, including nuclear medicine, desalination and water treatment, wind power, hydrogen production etc. With the headquarters based in Moscow, the company has offices in 50 countries with more than a quarter-million employees. Rosatom has been a member of the AEC since 2021.